Changes to Self Assessment (SA) – a guide for tax agents

Published March 2008

This agent-specific guide aims to provide you with all the information you need regarding the changes we are making to Self Assessment (SA) this year. It includes details on the new filing dates for SA Tax Returns, design changes to the main Tax Returns, changes for computer-generated paper returns ('substitutes'), late filing penalties, exceptions and HM Revenue & Customs (HMRC) contact details for agents.

Further information on using HMRC Online Services is available on the Online Services pages.

Further guides and information on a range of subjects relevant to tax agents is available on the Tax Agents and advisers pages.

New earlier deadline for paper SA Tax Returns from April 2008

For 2007-08 tax returns, SA Online gives the longest deadline by which to file – 31 January 2009. For paper-based tax returns the deadline is now 31 October 2008, three months earlier than the online deadline, although your clients still have until 31 January 2009 to pay any tax due.

Other important points to note are:

  • The period that HMRC have to enquire into a return – the 'enquiry window' – is now linked to the date of filing rather than to the filing deadline, giving certainty sooner for those who file earlier.
  • The HMRC calculation deadline for paper returns has also changed to 31 October in line with the filing deadline. If any client – including those excepted from the new filing deadline – wants HMRC to calculate their tax liability, their paper return should be submitted by 31 October to guarantee that a tax calculation will be issued by the payment deadline of 31 January. Alternatively you can file online to get an automatic calculation.
  • There are some exceptions to the new deadline for those clients whose returns cannot be filed online. For further details of the exceptions to online filing, please see the section Exceptions to the 31 October paper filing deadline.

The primary legislation covering these changes to SA can be found at Sections 88 to 92 and Section 96 of the Finance Act 2007. This legislation is effective for years of assessment beginning on or after 6 April 2007 (the 2007-08 return onwards).

Before you send your client’s SA Tax Return you must make a copy and ask them to make a declaration confirming that the content of the return is correct to the best of their knowledge and belief. The copy of the return information and your client’s declaration may be on paper or electronic – for example, your client could send you their declaration by email - although you will also need to consider any conditions imposed by your professional indemnity insurance. Once your client has made the declaration you may file the return online. We advise you, or your client, to keep a copy of the return and the declaration.

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Benefits of online filing

For the tax year 2006/07, more than 3.75 million SA Tax Returns were filed online, benefiting from automatic calculation of liability, faster repayment of money owed (in most cases) and immediate acknowledgement that a return had been received by HMRC.

Filing online can also save time, particularly when dealing with multiple returns. It reduces errors and discrepancies – many of which are picked up instantly – in turn reducing the need for requests for new or amended information.

We know that, for some, changing to online tax returns will take some getting used to. But in the long term, completing SA Tax Returns online will make tax easier and quicker for all of us.

Improving system stability

A record number of SA Tax Returns, including a high proportion submitted by tax agents, were successfully filed online this year – more than 3.75 million compared with just under 3 million the previous year.

However HMRC’s SA Online service was partially disrupted on 31 January 2008. The service also ran slowly at times on 1 February 2008. We apologise to you and your clients for any difficulties you experienced. These problems did not affect those filing using commercial software.

We have consistently said that nobody will be unfairly penalised for filing late due to problems with HMRC systems close to the deadline – so in response to these problems, HMRC announced that any return (whether online or paper) received by midnight 1 February 2008 would be treated as filed on time.

We also explained that where users experienced problems with the SA Online service on 31 January 2008 or 1 February 2008, and were unable to file by midnight 1 February 2008, we would accept claims for 'reasonable excuse' in the usual way. This means we will remove any late filing penalty and treat the return as filed on time where the problems with the HMRC Online Service were the cause of the delay and the return was filed within a reasonable period afterwards.

Actions to prevent IT problems from disrupting our Online Services in future include:

  • substantial investment in IT as part of the implementation of Lord Carter’s recommendations, including new infrastructure foundations for the SA Online service from April 2008
  • enhanced disaster tolerance and the ability to use our servers more flexibly to support busy times for all our Online Services and to keep systems running normally while maintenance is carried out
  • continued early and regular testing of services and enhancements, including user testing

If the service is disrupted during any future peak, HMRC will again respond quickly to ensure that nobody is unfairly penalised.

New design for SA main Tax Return

As part of our ongoing improvements, we are introducing a redesigned paper main Tax Return (SA100) for the tax year 2007-08, and have also made significant changes to the online return to reflect these changes.

The aim is to make the return easier for you and your clients to understand by giving greater clarity – avoiding jargon and technical terms wherever possible – and reducing the amount of information we ask for. The redesign comes as a result of extensive research involving focus groups, usability testing of draft forms, workshops and consultations with representative bodies.

Detailed guidance on the redesigned paper main Tax Return.

HMRC’s version of the online return will now offer:

  • improved 'tailoring', enabling you to customise the return to you client’s individual circumstances and go directly to relevant screens
  • pre-population of certain information that we know can be difficult to locate, including figures for PAYE under or over payments (there will be the facility to overwrite these if you believe they are incorrect)
  • a more intuitive flow of screens which we believe significantly improves online completion of the return

Please note that for the 2007-08 returns onwards, clients who complete the Capital Gains pages must also send in their capital gains computations.

Late filing and penalties

31 October is the deadline for paper returns (subject to the exceptions below). Paper returns filed after 31 October are late and your client may be liable to be charged a late filing penalty. The enquiry window will also be extended. We will still accept paper returns after 31 October, but by filing online instead (by 31 January) no penalty will arise. Online returns filed after 31 January are late and may be liable for a penalty.

Once you have filed a return on behalf of your client – whether by paper or online – this is considered the legal return for all relevant tax purposes. There is therefore no scope to replace a late paper return with a subsequent online return for the same year.

If you believe that there is a reasonable excuse for not filing on time, you should explain to HMRC why you have filed late and ask for that explanation to be taken into account. HMRC will then consider whether a reasonable excuse applies. If so, then your client will not be liable to a penalty. If doubts remain after discussion with HMRC, cases can be referred to the General or Special Commissioners for their ruling.

If you or your client pay any tax that they owe by 31 January 2009, the late filing penalty will be reduced to nil. This is called 'capping'. It is a longstanding arrangement designed to encourage prompt payment even by those that file late. We are keeping this arrangement for now as a 'safety net' for customers who inadvertently miss the paper deadline because they had not yet realised that the dates had changed. But this law is under review and there is no guarantee that the arrangement will be available after this year, so it makes sense to get into (and get your clients into) good filing habits now.

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Paying electronically

We accept payment by a range of methods, but recommend that you or your clients pay electronically. Electronic payments are safer, more secure and very efficient. They provide certainty about when payment will reach us, avoid postal delays and allow you to pay at any convenient time if you use the internet or telephone banking.

Tax due can be paid electronically:

  • Using Internet or telephone banking – this requires our bank account details and the Unique Taxpayer Reference number (UTR – made up of ten digits and the letter K, shown on the payslip at the bottom of a Statement of Account). It is important that the reference number is given with no gaps between characters. It normally takes three working days for these payments to reach our account – please check with the bank or building society to ensure a payment is initiated on time.
  • Over the Internet using a Maestro, Solo, Electron or Visa debit card drawn on a UK bank account, by visiting the Online Payment Service. This service is supported by Alliance & Leicester. An acknowledgement is displayed when the payment is processed. Payment will be treated as having been made on the day that the service is used, and will be debited two working days after the payment was made.
  • Using Bank Giro or at the Post Office.

Further details, including HMRC bank account information, can be found on our Payments pages.

If your clients find that they cannot pay on time, they should telephone 0845 366 1204, quoting their SA reference number.

Exceptions to the 31 October deadline

31 October is the new statutory deadline for filing SA returns on paper, but there are three cases in which HMRC will allow extra time – until 31 January – for paper filing without incurring a penalty.

There are a small number of SA customers whose returns cannot currently be filed online because HMRC has not yet been able to develop online facilities for their particular circumstances, using either HMRC or commercial software products.

Because this very small minority of SA customers do not have the choice of online filing, they will be allowed to file on paper up to 31 January, without incurring any penalty that might otherwise be due for paper filing after 31 October. However, HMRC encourages all taxpayers to file early where they are in a position to do so.

These three exceptional cases are:

  • trustees of Registered Pension Schemes
  • non-resident companies liable to Income Tax
  • a small proportion of other customers for whom facilities to file online are not yet available – see the following section on Changes for paper 'substitutes' for more information

Changes for paper 'substitutes'

HMRC previously approved some alternative versions of the SA paper return, known as substitute returns, which were produced by commercial software then printed out for submission. They had the same fields as the official HMRC form but varied in appearance.

The great majority of software products that enabled paper substitutes already incorporate the option to file online. It makes sense that information prepared electronically should be submitted online – this is more efficient for everyone and reduces error.

For these reasons, for 2007-08 returns onwards, HMRC will no longer accept substitutes of the three main SA Tax Returns:

  • Tax Return – (SA100 series)
  • Partnership Tax Return – (SA800 series)
  • Trust and Estate Tax Return – (SA900 series)

For the time being, HMRC will continue to accept approved substitutes for:

  • The remaining types of SA Tax Return (Trustees of Registered Pension Schemes - SA 970, and Non-resident companies liable to Income Tax - SA 700).
  • Earlier years’ returns not available online, inclusive to 2006-07. From April 2009 it will be possible to file the 2007-08 return online, adding another return each year until returns for all in date filing years are available online.
  • For other relevant forms such as the R40.

Over time we hope to enable all customers to file online, and we will keep the ongoing need for substitutes under review.

Exceptions and 'identical' returns

There is a small proportion of SA customers whose returns cannot currently be filed online because HMRC has not yet developed online facilities for their particular circumstances.

For example, it may be impossible to file a relevant supplementary page online because neither HMRC nor commercial software yet provides this, or the customer’s reference number may not be recognised on the online authentication system because of additional internal HMRC safeguards on their records.

We do not want to force you back to pen and paper for returns in this category so, following consultation, HMRC will accept paper returns that have been prepared electronically, provided that they are identical in appearance to the official HMRC form.

HMRC has provided guidelines to software developers about what it considers to be identical, and you can check with product providers whether you can print an identical return from a particular product.

A list of software suppliers is available on our Online Services pages.

HMRC’s official form is available to download from our SA pages.

A full HMRC statement about substitute and identical returns is available here (PDF 54K).

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Attaching documents to the Main Tax Return

Since November 2006, you have been able submit online attachments with your clients’ online SA Returns.

Full guidance on attachments is available on our SA pages.

In summary, please note:

  • The online SA attachments feature must not be used to submit supplementary pages, additional returns or amendments to returns.
  • Attachments need to be true PDF files, created either by using software such as Adobe Acrobat Writer or a scanner.
  • The total file size must not exceed 5 MB, and SA Online allows a maximum of 20 attachments within this overall size limit. We would expect any attachment you submit to be well below this limit and instances where the upper limit is reached are very rare. As a guide, we suggest you submit no more than the equivalent of 20 pages of plain text. To minimise the size when creating a PDF file, we recommend not using colour and ensuring there are no logos or images within the document. If using a scanner, choose a low scanning resolution, ie 150dpi.
  • Attachments must be virus-free, not have additional files embedded, and not be encrypted or password protected.
  • The pound (£), dollar ($), hash (#) and underscore (_) characters are not currently allowable in the title of any attachment file sent with a return (but can be included in the text).

We will not routinely review attachments and you should therefore attach only material supporting the return, not something that requires a direct reply. But we will examine attachments prior to opening any enquiry into a return, to ensure they do not contain relevant information which could make an enquiry unnecessary.

SA Online – software products

A range of online filing-enabled software and forms is available from commercial (third party) software suppliers to enable online filing of returns, supplementary pages and attachments. These products offer a variety of different features – for example some allow Partnership (SA800) and Trust and Estate (SA900) Tax Returns to be filed online.

All the products listed on our Software Development pages have been successfully tested to ensure that their forms and supplementary pages can be sent to us over the internet. Further products will be added to the list once they have tested successfully.

HMRC also provide a free online filing product, 'Online Tax Return – Self Assessment'. This will allow you to file the main SA Tax Return (SA100) and a selection of supplementary pages. You can find it as one of the available options when you have logged on to our Online Services. Currently we do not offer an online product for Partnership or Trust and Estate Tax Returns though these can be filed online using some commercial products as above.

We have tested all the features of our online filing service, and provide support to users through our Online Services helpdesk.

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Common mistakes when filing SA returns

We have compiled a list of the common mistakes that cause problems in processing SA Tax Returns. Of course, these mistakes are less common when filing online, as calculations are done for you and checks are in place to help ensure information required is requested by our system.

By avoiding the following pitfalls you can help your clients avoid unnecessary delays and questions due to missing or incorrect information:

  1. Not explaining unusual variations – there is an area on the return which allows you to explain variations. By filling in this section you can avoid follow-up requests for extra information to explain any apparent discrepancies.
  2. Misclassifying expenses – any anomalies may trigger a request for further explanation.
  3. Not including relevant supplementary pages – any supplementary pages indicated as relevant must be sent with the return.
  4. Not including actual information on the main Tax Return – it is important to provide specific figures where appropriate on the return itself – reference to supplementary sheets or accounts can lead to delays.
  5. Capital expenditure vs. capital allowances – another common mistake is entering a client’s capital expenditure in the Self Employment section instead of their capital allowances, resulting in a claim to undue tax relief.
  6. Highlighting 'private use' items – it should be made clear where items have been used for private purposes, and the relevant adjustments made to reflect this.

Informing your clients

We have produced a flyer (PDF 61K) that you can use to inform your clients – if you wish – of the changes to SA. This covers the essentials of the changes in straightforward terms, and indicates the circumstances in which your clients may need to contact you for further discussion.

Contact details

Following favourable feedback from Working Together partners and individual agents, we offer a speed dialling facility for agents telephoning our Taxes Contact Centres. This facility was launched to help agents who were having difficulty contacting us on the public 0845 numbers, and enables you to 'jump the queue'. We are also starting to extend this as a dedicated service to give you access to more experienced advisers. Further information and the latest list of priority numbers and their corresponding Contact Centres and Area Offices can be found on our Working Together pages.

You may already be aware that our busiest times for calls are on Mondays and on the days that follow a Bank Holiday. It would be helpful if you could try to avoid contacting us at these times. Please only use these special numbers if you have an urgent issue and are unable to get through on the usual 0845 lines. The numbers are for agents’ use only. Please do not pass these numbers on to your clients.

All our Contact Centres are open Monday to Friday 8.00 am to 8.00 pm and Saturday 8.00 am to 4.00 pm, except Belfast which is open Monday to Friday 8.30 am to 5.00 pm.

We are also piloting agent Customer Relationship Managers (CRMs) as a point of contact when it is not possible for you to resolve problems through the usual routes. This service is currently available in Cardiff, Newcastle, Manchester, Liverpool and Glasgow.

For further information on HMRC contact details, including a basic outline of the many different contact channels available and examples of the best routes to use in most cases, read the 'How to contact us' guide on the Tax agents and advisers pages.